Biliary atresia (BA) is the leading indication for pediatric liver transplantation. Rhesus rotavirus (RRV)-induced murine BA develops an obstructive cholangiopathy that mirrors the human disease. We have previously demonstrated the "SRL" motif on RRV's VP4 protein binds to heat shock cognate 70 protein (Hsc70) facilitating entry into cholangiocytes. In this study, we analyzed how binding to Hsc70 affects viral endocytosis, intracellular trafficking, and uniquely activates the signaling pathway that induces murine BA. Inhibition of clathrin- and dynamin-mediated endocytosis in cholangiocytes following infection demonstrated that blocking dynamin decreased the infectivity of RRV, whereas clathrin inhibition had no effect. Blocking early endosome trafficking resulted in decreased viral titers of RRV, whereas late endosome inhibition had no effect. After infection, TLR3 expression and p-NF-κB levels increased in cholangiocytes, leading to increased release of CXCL9 and CXCL10. Infected mice knocked out for TLR3 had decreased levels of CXCL9 and CXCL10, resulting in reduced NK cell numbers. Human patients with BA experienced an increase in CXCL10 levels, suggesting this as a possible pathway leading to biliary obstruction. Viruses that use Hsc70 for cell entry exploit a clathrin-independent pathway and traffic to the early recycling endosome uniquely activating NF-κB through TLR3, leading to the release of CXCL9 and CXCL10 and inducing NK cell recruitment. These results define how the "SRL" peptide found on RRV's VP4 protein modulates viral trafficking, inducing the host response leading to bile duct obstruction.NEW & NOTEWORTHY In this study, we have determined that the presence of the "SRL" peptide on RRV alters its method of endocytosis and intracellular trafficking through viral binding to heat shock cognate 70 protein. This initiates an inflammatory pathway that stimulates the release of cytokines associated with biliary damage and obstruction.